Month: January 2014

With the introduction of the new MyRA by President Obama in his state of the union speech on 1/28/14, many people are up in arms about their retirement accounts. Many in the alternative media have been warning about this for years, as have non-corrupt Govt officials (Ron Paul- likely the only one), as have other financial experts. We have referenced these warnings, videos, and articles on our blog, click HERE.

The concern of Govt bail in into retirement accounts is a real possibility, and getting more real every day. I doubt they will cease funds, rather introduce a new “Save America Bond,” or something similarly named doused with propaganda semantics. I believe these will be a forced investment vehicle and the individual will by law have to contribute a percentage of his or her retirement fund into this bond program. According to well-known sources Legislation is already on the table. However, there is a solution to ‘jailbreak’ your retirement account from the clutches of the Govt and commercial banking system, and that solution is the conversion to an IRA LLC.

As this fear of confiscation escalates many people are considering cashing out their retirement accounts, paying taxes and penalties. Let me clarify the legal specifics and tax ramifications. If you withdraw prior to age 59 ½ there is a 10% penalty AND the entire withdrawal is taxed as regular income, regardless of the account’s cost basis. This can be extremely costly for even a small IRA cash out. Let’s use an example:

The withdrawals are taxed as regular income. Mr. Jones would have to pay over $36,475 of his $100,000 withdrawn; only retaining $63,525.

This is why we have been beating the drums about the benefits of the IRA LLC. If you convert your IRA to an IRA LLC you can take physical possession of gold, silver, or platinum. You can even hold cash. You can hold foreign currencies, stocks, almost anything. Just no collectibles and no life insurance contracts. You must also comply with “arms length” transactions.

Sounds great, what’s the catch? How much does this cost? The upfront cost can range from $1,500 to $3,000 to have an attorney or professional facilitator set one of these up, and the proper setup is crucial. Involved are numerous legal documents, affidavits, and compliance requirements that must be met.

We facilitate the entire process for $1,895, moving forward you actually save money as your annual fees are far less than they were in your traditional IRA. If you are interested in learning more or simply have some questions you would like answered, don’t hesitate to call, email or visit our website for more information.

You didn’t think the US could at first slowly, and then all of a sudden, expropriate retirement accounts and invest them in the “no risk, guaranteed return” MyRA Ponzi scheme introduced by Obama during the State of the Union address without lots of behavior-modifying indoctrination in the “friendly press” first now did you? Sure enough, here is the first major propaganda salvo, coming from none other than the US Treasury Secretary, Jack Lew, which will be published tomorrow across the McClatchy media empire.

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Just out from the US Treasury Department, “In an op-ed to be published in the January 31, 2014 editions of McClatchy Newspapers, Treasury Secretary Jacob J. Lew discusses myRA – a simple, safe and affordable starter savings account to help low and moderate-income Americans begin building towards a more secure financial future.”

myRA: A start to a secure retirement

Over the past five years, our country has accomplished a number of big things. The economy has grown stronger after being shaken to the core by the worst recession in our lifetimes. Our businesses have created more than 8 million jobs. The financial system is more resilient, with better protections for consumers and investors. And investments in domestic energy production have helped put the promise of American energy independence in sight.

In the meantime, health care costs have grown at their slowest rates in years while millions of families now have access to affordable health care coverage so they are not one hospital visit away from falling into financial ruin. Our auto industry is surging even as home values are rebounding. And the federal deficit has been cut by more than half.

So we have made clear progress. But we all understand that we are not where we want to be yet. Too many Americans cannot find a job. Too many Americans who do have a job are not getting paid enough to support their families and make ends meet. And too many Americans do not have the skills they need to succeed in today’s economy.

As President Barack Obama made clear in his State of the Union address, it is time to focus on restoring opportunity for all. That means helping to make sure more Americans can take part in our growing economy and build some economic security for the long term. To get that done, we are putting forward real, concrete solutions to our most pressing problems—from college affordability and job training to fair wages and a stable retirement.

Now, when it comes to retirement, you would think that the vast majority of working Americans would be putting some money away for their future. But the truth is, many are not. For millions of working men and women, it is not easy to save for the long haul. Many employers do not offer a retirement plan. And setting up a retirement account and maintaining it can often be too difficult, expensive and time-consuming.

The statistics paint a stark picture. Only about half of all workers have access to an employer-based retirement plan, such as a 401(k). And left on their own, few workers save. It is estimated that fewer than one out of 10 eligible workers actually contribute to an IRA.

Still, every American deserves the chance to build a secure retirement. That is why the Obama administration has designed a new way for working Americans to start saving for the future. This program, which will begin later this year, is called myRA or My Retirement Account.

This account is designed to help low- and middle-income workers, who are too often overlooked or ignored, begin saving for retirement. We are talking about the waitress who is holding down two part-time jobs to support her kids; the recent graduate who landed a job but is grappling with student loans; the janitor who has never been given the chance to invest in a retirement account.

Here is how myRA, which is simple, safe and affordable, will work.

You will be able to start saving with an initial deposit of as little as $25 and contribute as little as $5 each payday. If an employer chooses to participate, contributions are made through automatic payroll deductions, making them hassle-free.

There are no fees—100% of any contribution goes into the account and is invested in a Treasury security. That means it will be backed by the full faith and credit of the United States, will earn the same interest rate that is available to federal employees for their retirement savings, and the balance will never go down.

Finally, myRA is not tied to any one employer—it belongs to the worker, not the workplace. In other words, the account is portable and can be easily rolled into a Roth IRA. And if myRA savers ever need to, they can withdraw their contributions tax-free, at any time.

MyRA is a specific way in which we can help hardworking Americans save for the future. But there are other things we can do. In particular, the President has consistently called on Congress to help tens of millions of middle class Americans save for the future by opening up access to automatic IRAs in the workplace.

And we will continue to look for ways to help increase economic security, strengthen the middle class, and provide more ladders of opportunity into the middle class. That is how we will help make sure every American can take part in this recovery. And that is how we will help usher in a stronger, more prosperous future for our country.

Now it really is official folks. The bureaucats are salivating over that $5 Trillion Retirement Piggybank…

From Zerohedge:

Wondering who will take over the mantle of Treasury bond buyer now that the Fed is stepping away? Curious of the government’s next steps towards repression and control of wealth? Wait no longer. As the AP reports, President Obama will unveil a new retirement savings plan tonight that allows first-time savers to buy US Treasury bonds tax-deferred for retirement. Of course, this is not the mandatory IRA that remains somewhat inevitable (as the muddle-through fails) but is certainly a step in the direction we alerted readers to a year ago by which the government generously offers to help manage your retirement savings. Two words spring to mind… remember Poland.

Via AP,

Eager not to be limited by legislative gridlock, Obama is also expected to announce executive actions on job training, retirement security and help for the long-term unemployed in finding work.

Among those actions is a new retirement savings plan geared toward workers whose employers don’t currently offer such plans.

The program would allow first-time savers to start building up savings in Treasury bonds that eventually could be converted into a traditional IRAs, according to two people who have discussed the proposal with the administration. Those people weren’t authorized to discuss it ahead of the announcement and insisted on anonymity.
Of course, this is not what the CFPB suggested a year ago… We’re sure the government is just trying to protect your retirement account from terrorists. From Bloomberg:

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.
But it’s getting close.

I got an email from Jim Willie, Golden Jackass, with an article and information linked about how people are finding out their 401K retirement plans have been switched to 100% government bonds without approval or notice. In fact they are being switched out from where the individual allocated their retirement money. Jim has been predicting that this would happen for awhile now and it appears his prediction is now becoming reality.

I wrote about retirement plans many times. The latest was how retirement plans are expensive and about Perpetual Assets and what they do. (The video of my interview of Will is on the side, that explains what Perpetual Assets is)

Here is an article from Economic Policy about how the government is coming after everyone’s retirement accounts.

Check your statement and find out if your retirement plan is being rolled into government bonds too. Call your financial planner who is in charge of it, ask if your retirement plan can be put into bonds without you being notified.

Recently, when writing about the growing popularity of “Gold ATMs”, I mentioned that they’re being placed in cities all over the world, including within the United States. But being able to exchange fiat Federal Reserve Notes for real money at an ATM is only the first step; the next order of business is for banks to allow their customers to set up gold- and silver-based accounts, which they can use to pay their everyday expenses via their debit cards linked to those accounts.

That next step is already here.

First, we had Peter Schiff opening a bank last year that allowed its customers to do exactly that: open accounts in any denomination you want, whether fiat currency OR gold bullion — whatever you’d like. You can even get a “gold debit card” that you can use anywhere in the world. It’s backed by actual gold, which converts to whatever currency you’re needing at the time you hit that ATM.

It’s just the sort of thing that the Constitutional Tender Act calls for in banking…

…Well, there is one caveat: you can’t open an account at this bank if you’re a U.S. citizen.

U.S. security laws have become so intrusive, burdensome, and expensive to comply with, that it made it difficult for Schiff to offer his services to his non-U.S. clients on a globally-competitive basis. So, he opened his bank offshore, in St. Vincents and the Grenadines. Since it operates outside the jurisdiction of U.S. security regulations, and does not accept accounts from American citizens or residents, U.S. regulations don’t apply.

As a result, this offshore bank can offer a far more robust platform of services, with less hassle and at lower cost, than Schiff’s U.S. brokerage firm. In addition, bank clients’ privacy is protected by strict bank secrecy laws of St. Vincents and the Grenadines.

So, if you’d like to finally open a bank account backed by real money — sound money — that you can have at your fingertips (literally!) at any time — well, now you can…

…Unless you’re American.

That needed to change… and now it’s starting to.

I received an email notice today that a company called Perpetual Assets is now offering a Debit Card… backed by SILVER:

Perpetual Assets is proud to now be offering clients the Precious Metals Access Card. For the longest time one of the greatest objections to owning precious metals was that they were not accepted by merchants, therefore were not practical as a means of living off of, paying monthly bills, and conducting transactions.

That objection has now become a thing of the past. The Precious Metals Access Card allows you to have the inflation hedge of actually owning physical silver, while also providing instant liquidity. Anywhere Visa is accepted, as far as the merchant is concerned you’re using USD to purchase the good or service. Your account is 100% fully segregated, 100% fully insured, and 100% maintains your balance in ounces of silver until your transactions take place.

Gone is your need to find the local dealer to sell your silver too, gone is the worry of how much disposable income should be maintained in silver, gone is the need to educate merchants on sound money.

From what I’m hearing from other sources, there are even MORE silver- and gold-backed debit cards coming, from other financial institutions. This is exactly what we said would happen, and this is exactly how these kinds of accounts can be used after passage of the Constitutional Tender Act: businesses and consumers, who would now be required to use gold and silver coins to pay taxes to, or receive payment from, the State (because the U.S. Constitution requires it), would find themselves in need of converting their fiat Federal Reserve Notes into real money, that is, gold and silver coins. They would still be using FRNs in non-State transactions, of course; but as businesses start posting their prices in dual currencies (FRNs and Gold or Silver Eagles) in order to take in coins to pay taxes, consumers would start seeing that the prices of goods are rising in FRNs, but they’re remaining fairly level in Eagles. (For example, that cool digital camera at Wal-Mart is priced today at $1 Silver Eagle, or $22 FRN; next month, its price has risen in FRNs to $32, but it’s still priced in silver at $1 Silver Eagle, because that one-ounce silver coin retains its actual value in relation to the amount of products it can buy.) In a kind of “reverse Gresham’s Law” effect (which economist Peter Bernholz has labeled “Thiers’ Law“), the use of money that keeps its value — gold and silver coins — would increase, and the use of money that loses its value — FRNs — would decrease: good money would chase out bad money.

Even simpler will be the use of ATM Cards, Debit Accounts, and “Secure Credit Cards” backed by gold and silver: you’ve got 20 Silver Eagles in your account from your recent State income tax refund; the cashier runs the camera you want over the scanner, you swipe your card and choose from, say, “FRN credit”, “FRN debit”, “Silver/Gold credit” or “Silver/Gold debit” on the little touch screen; you select “Silver/Gold debit”, pay a Silver Eagle out of your account and into Wal-Mart’s, and voila, the camera is yours… and Wal-Mart has another silver coin it can use to pay its own State sales taxes or business fees.

What if you don’t have enough silver in your bank accounts to pay for the camera, but you do have enough fiat money? Then pay with Federal Reserve Notes… or whip out your iPhone, fire up your banking app, and convert some FRNs into your Silver account by using your friendly bank’s automatic conversion service which keeps track of the silver and gold price in real time — just like those “gold ATMs” do.

It’s simple. It’s easy. It’s already being done. And it would save the monetary system of the State and, ultimately, of all these United States.

Why is any of this important? Why should we care if we can use gold ATMs, or use silver debit cards at Wal-Mart?

Because, as I mentioned in the previous article, one of the most interesting things to come out in the State legislative committee hearings that the Constitutional Tender Act received when it was first introduced in Georgia, was the idea in those legislators’ heads that gold and silver simply could not be USED as money, PERIOD. We heard comments like these:

“Where would the State keep all of its gold and silver coins?” (Answer: Where does the State keep all of its Federal Reserve Notes? In a BANK, of course – just like they would under this Act.)
“How would people be able to carry around all of those heavy gold and silver coins?” (Answer: How do they carry tens of thousands of dollars in Federal Reserve Notes around? They DON’T – they carry checkbooks and debit cards – just like they would under this Act.)
“How would people buy things at the grocery store?” (Answer: How do people buy things at the grocery store now? With physical cash, or with a check, or with a debit card, or with a credit card – just like they would under this Act.)
What do all of these kinds of questions have in common? They’re based on a narrow view of what money is. Too many people have simply gotten used to the idea that pieces of green paper with dead presidents’ pictures on them, and that aren’t backed by anything of value, are “money,” and gold and silver are “commodities.” But that’s a rather new idea, historically speaking; fiat money (pieces of paper backed by nothing, and declared “legal tender” by the government) was very much frowned upon by our Founders – which is why they explicitly denied to the States the power to use it, in Article I, Section 10. Until the past century or so, you could always pay for things with actual gold and silver coins. But, the general population has been trained by our “modern” government to throw that notion away, and to keep using those pieces of paper that lose more and more of their value every day… while gold and silver keeps its value in the long term.

THAT is why the gold ATMs and the silver-based debit cards are important: this is just a “taste” of the modern specie-based banking we can look forward to, if we implement ideas like the Constitutional Tender Act. And that’s why these ideas are key: the more we get used to the notion of gold and silver being money, the sooner we’ll finally return to sound money that holds its value — and the sooner we can save our trashed economy.

So get your State legislators to introduce the Constitutional Tender Act bill — and then rally everyone to make sure it’s passed into law… before it’s too late.

“Perhaps the biggest advantage of the IRA LLC to the PM investor is that the individual (manager of the LLC) can take physical possession of Gold and Silver Eagle Coins with IRA funds and it is not a taxable distribution. The metal does not have to be held at a depository.”

Nothing says Govt intervention like “Pension, IRA, or 401k”. I must admit it was well played by the State to offer a “tax deferred” or “tax advantaged” way to save, thereby enticing investors to shave off a piece of their income each year to stash away in a Govt controlled slush fund. History warns when Govts go broke they are quick to tap into state controlled pension funds. After all Mr. Investor we have allowed tax free investment so we get to dictate how these funds are allocated. Before I go on a tangent lets give a brief overview.

What is an IRA?
Traditionally an IRA is a tax deferred growth account that allows one to save for retirement. An individual can contribute a portion (up to $5,500 – $6,500 for 2013 & 2014) of his or her income and that contribution comes off the individual’s taxable income. Then the money compounds (ideally) tax deferred. The individual pays taxes on the gains in the account later in life during distribution stage, allowable at age 59.5 and mandatory at 70.5. Some strategies like a SEP account allow the individual to contribute much more, up to 25% of total income, lowering the person’s AGI (adjusted gross income) even further. IRAs and like accounts are eligible for rollover to a self directed account which offers more investment flexibility and greater control by the individual.

What is the 401k plan?
The 401k is a type of group plan typically administered through an employer for its employees. Some employers contribute or match a portion of the employee’s contribution to his or her individual account within the plan. This additional contribution is a major pro to this plan. The con unfortunately is that few of these plans offer what are called ‘in service withdrawals’, or rollovers into an IRA or self directed IRA platform. With most 401ks the individual’s money is ‘locked up’ until retirement age or employment severance. That said, an old 401k from a previous employer is eligible for rollover to a more flexible platform.

What is a self directed IRA?
Self directed IRAs encompass about $100 billion, still only about 2% of total IRA assets. Under this structure everything is the same as a traditional IRA except the custodian used is one that allows and specializes in alternative investment classes for retirement accounts. The large financial institutions when acting as custodians for IRAs typically only allow investments into the piggybanks from which they profit the most, i.e. publically traded stocks, bonds, mutual funds, and bank CDs. The custodian is the IRS compliant trustee that houses the account that your IRA owns and ultimately approves its investments. Self directed IRA custodians allow investments into numerous desirable investment classes including real estate, precious metals, private placements, and LLCs. These accounts differ in their setup fees, ongoing management fees, flexibility, and most importantly to the precious metals investor, where the assets are held.

Let’s talk about fees…
Traditional IRAs and 401ks managed by broker dealers, investment advisors, and fund managers typically have some of the highest fee structures, another major reason the self-directed platforms are desired. Many of these fees are hidden load fees that the investor never even sees. In recent years median expense ratios for mutual funds have been 1.27% plus 1.2% in trading fees. Thereby over time the average mutual fund has yielded a 7% return before fees, but only 4.5% after fees.

Fees for self directed IRAs…
The main 2 types of accounts we will address here are the self directed IRAs that allow investment into precious metals and real estate. The precious metals IRA advantage is its low cost to setup and maintain. Setup fees range $250 – $500 with annual maintenance and storage fees of $150-$500. The disadvantage here is control of storage. The bullion must be held by a third party depository. Self directed plans that are geared for real estate can differ in cost based on transaction frequency or the portfolio value. A $100,000 portfolio can expect about $500 in annual fees, for $500,00 it jumps to $1,600 annually. A small portfolio with limited transactions may only pay a few hundred dollars in annual fees.

The IRA LLC…
I must lead with a caveat here that I am biased to this concept. I am a ‘for profit’ consultant and facilitator of the IRA LLC. This platform has its pros and cons as any other. The upfront cost can range from $1,500 to $3,000 to have an attorney or professional facilitator set one of these up, and the proper setup is crucial. Involved are numerous legal documents, affidavits, and compliance requirements that must be met. Once setup the flexibility is great and the ongoing fee structure is very low, typically $115 to $200 per year. Within the structure the LLC acts as an investment company that is managed by the individual, whom is also the beneficiary of the IRA. As long as there are no prohibited transactions the investor can invest in literally anything except collectibles and life insurance contracts. Many include: investment real estate, bug out property, private placements, oil & gas leases, loans, Bitcoin, other LLCs, etc. The LLC also adds another layer of protection from potential Govt pillaging of retirement accounts.

Perhaps the biggest advantage of the IRA LLC to the PM investor is that the individual (manager of the LLC) can take physical possession of Gold and Silver Eagle Coins with IRA funds and it is not a taxable distribution. The metal does not have to be held at a depository. For folks that have considered cashing out their IRAS or 401ks thus paying taxes and penalties, this can be a much cheaper alternative to physically holding precious metals. There are no additional IRS reporting requirements, merely an annual dollar asset valuation reported to the custodian.
If you want more information or if you simply have questions, feel free to visit our website and contact us anytime.

In an effort to become informed and provide further resources for our clients and friends to inform themselves, I have been following the work of the National Senior’s Council. This is not just about Seniors, but anyone with retirement assets. Please support the organizations work if you desire…

The National Seniors Council continues to lead the fight to prevent Congress and the Obama Administration from confiscating private retirement savings as part of a scheme to create a new “national retirement system.”

During negotiations between Congress and the Administration over the so-called “fiscal cliff,” NSC’s website was nearly overwhelmed with visitors seeking information on efforts to change the tax code to limit the ability of Americans to save on their own for retirement.